Social cognition is defined in various ways, and generally refers to mental operations that underlie social interactions, including perceiving, interpreting, managing, and generating responses to the intentions and behaviors of others. Social cognitive impairments are determinants of community functioning in schizophrenia and are increasingly viewed as targets of intervention. To evaluate social cognition as a treatment endpoint, it is necessary to include reliable and valid social cognitive measures in clinical trials. The current proposal is framed in a translational context, in which we have turned to social neuroscience to select measures that have good validity and that are highly promising for clinical studies with schizophrenia patients. To this end, we assembled scientific experts in experimental psychopathology, social neuroscience, clinical trial methodology, and psychometrics from UCLA, Columbia University, and University of North Carolina. The project has three aims: The first aim is to determine the extent to which selected measures from social neuroscience are suitable for use in clinical trials of schizophrenia. The second aim is to use these measures to account for unexplained variance in a functioning in schizophrenia. The third aim is to better understand the ways in which social cognition acts as a mediator between basic (non-social) cognition and functioning in schizophrenia. These study aims will be evaluated in a sample of 240 schizophrenia patients (tested twice at a 4-week interval) and 50 healthy comparison subjects (tested once). Participants will be recruited equally at two performance sites (Los Angeles and Chapel Hill). This proposal is submitted under NIMH Funding Opportunity Announcement (FOA) PA-08-255 Functioning of People with Mental Disorders and it addresses two objectives of the NIMH Strategic Plan. Within Objective 1 (Promote Discovery in Brain and Behavioral Sciences) this project is consistent with the goal to deconstruct clusters of complex behaviors and attempt to link these to underlying neurobiological systems. In this study we will: 1) deconstruct basic cognition and social cognition in schizophrenia and 2) differentiate subprocesses within social cognition. Within Objective 3 (Develop new and better interventions), our project is consistent with the goal to broaden the focus by what is meant by outcome measures in treatment research. We will evaluate measures from social neuroscience for their use in clinical trials of cognition enhancement in schizophrenia with a broad focus on improving overall functioning. The long-term goals of this project are to: 1) understand the determinants of community functioning in schizophrenia and 2) facilitate the development of effective drugs for social cognitive deficits that will help individuals with schizophrenia acquire skills and function better in their daily lives.